Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(a) IN GENERAL
330.2715.910 Rental Agency Lease to Car Dealer. A car rental agency rents cars on which it reports tax on rental receipts to auto dealers for the following purposes:
(1) The car dealer furnishes the vehicle to its customers while the customer's car is being repaired pursuant to a mandatory warranty on which tax was reported and paid. The furnishing of the vehicle is required by the warranty.
(2) The car dealer furnishes the vehicle to its customer who is a lessee of a vehicle for which the dealer is reporting tax on rental receipts during the period the lessee's car is being repaired.
(3) Same as 2 except the dealer has paid tax on cost of the leased vehicle rather than rental receipts.
Under situation 1, the lease to the dealer is a sale for resale since the loaner is required by the original contract on which tax was paid. Under situation 2, the lease to the dealer is for resale whether or not it is required by a mandatory warranty because the loaner is regarded as part of the taxable continuing sale. Under situation 3, the dealer is the consumer and tax is due on the rentals payable by the car dealer, whether or not the loan is required by the lease agreement. 4/17/97.